Guidance on the Net for phoney credit

Frauds netting up to pounds 5,000 a day are being carried out by young criminals making fake credit cards out of "loyalty cards" from supermarkets, police revealed yesterday.

Officers in the West Midlands said that teenagers are reprogramming the cards' magnetic strips with details of real credit cards. The police also claimed that instructions on how to do this are being picked up from the Internet, where algorithms are available to generate valid card numbers.

The cards are used for telephone and mail order services, and for low- value store purchases below the level where a shop would seek authorisation of the holder's credit limit.

The guides on the Internet tell the young people that all they need to begin producing fake credit cards are the plastic supermarket loyalty cards pioneered in the UK by the Tesco chain.

Tesco, who were followed in the launch of their customer loyalty card by Safeway and most recently Sainsbury's, issue customers with cards which have a magnetic strip similar to those on credit cards.

The criminals can then legally purchase a card-encoding machine for around pounds 700 and by following the Internet instructions, change the information contained in the strip - using a genuine account number and expiry date.

Such information is sold on the black market for around pounds 20 along with other information, such as the cardholder's address, date of birth and national insurance number.

The team of four detectives investigating credit card crimes in the region say that teenagers as young as 16 are involved.

Det Sgt Peter Rowan of West Midlands Police fraud squad said: "The teenagers are the computer generation. There is a new breed of crime that is directly associated to the spread of information technology.

"It's too late to try and stop this kind of card crime. There are thousands of these cards on the market legitimately from supermarkets, petrol station and video clubs which can all be used in fraud.

"The banking industry is looking at changing the cards away from using magnetic strips to microchips and that should be introduced in two to three years."

The new "smart cards" would carry a semiconductor chip with a memory and a micro-processor embedded in the card itself allowing more sophisticated information to be contained and would therefore be harder to counterfeit.

However, Visa, the largest credit card issuer, said yesterday: "Counterfeiting is a tiny proportion of the problem. By far the biggest is lost and stolen cards." Credit card fraud cost pounds 83m in 1995.

Det Sgt Rowan said that three people in the West Midlands were sent to prison last year for card-related offences. One was a bank employee who sold bank account and card details obtained from work, enabling pounds 614,000 to be taken from his employers within two months.